ONCE A GIANT, Berders changed the way books were sold and BORDERS BECAME became
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ONCE A GIANT, Berders changed the way books were sold and BORDERS BECAME became the largest bock retailer in the world A "WEAKLING" ON ITS KNEES At one time, it had more than 1,300 large stores and approximately 35,000 empleyees. But, in February 2011, Borders declared bankruptcy when it did so,a had shrunk to 674 stores and about 19,500 employees Borders experi- enced hard times and paid for the ineffiective strategies employed by its executive leader ship teams. At its peak in the 1990s, Borders stock sold for more than $35 per share. On the day it declared bankruptey, Borders stock sold for 23 cents per share. What went wrong? Many goods are now sold by large chain store retailers However, the way people buy and what they buy is beginning to change- especialy in retal sales of books Since 1995 and the founding of Amazon.com, books have been sold over the Internet. But with the rise of digital technology, electronic books and devices to read them have become highly popular. Quite obviously, they do not require lerge "brick and-mortar stores to sell them. Borders simply did not adjust quickly or effectively to these changes in the marketplace. Of course, it hed to compete against Barnes& Noble, Walmart Costco, and other large retalers seling books. It did not adjust quickly to Amazon's appearance in the market. It was much slower than Barnes & Noble, and that company required almost two years to launch Barnesandnoble.com. One of Borders' early mistakes was to develop an agree- ment with Amazon to handle its Internet sales instead of establishing its own Web presence NOW Web-based retailing is growing in popularity. especially for electronic books. With eRead- ers such as Amazon's Kindle, Barnes & Nobles NOOK, and Apple's highly versatile iPad, the old way of selling books is rapidly becoming a dinosaur. While these changes were occurring in the retail book market, Borders invested heavily to enhance the marketing for traditional book selling. Borders tried to lure customers to its stores with promises of an enriching experience. Learn more about Barnes & Noble's eeb-based retailing www.cngagebrain Borders was also harmed by chaos in its execu tive ranks, having three regular CEOs and an interim CEO within a period of about two years As a result of poor strategic decisions and inef fective strategic leadership, Borders suffered net While Bordler's primary competitor, Barnes losses of $344 million for 2008 and 2009, It also and Noble, beefed up its online presence and had compiled a massive debt in a campaign to instead to focus on expanding its physical buy back its stock while trying to keep the price plants, efurbishing its stores and outsourcing high. All of its actions had the opposite effect.s onine sele created the Nook eReader. Borders chose th EN to d This its online sales operation to Amazon. This Borders wants to stey proved to be the wrong strategy With the bankruptcy, Borders wants to stay in business if it can reach agreement with its . proved to be the debtors. It plans to close about 200 more stores, and obtain reduced rent by renegotiating ts current long leases. But it must do much more and quickly if it is to survive in the new book retail market. At the present time, it is difficult to see how Borders can survive without the capabilities to navigate in this new competitive landscape. Sources C. Caldwel, 2011, A fate written in the stores, Financial Times, http//www.fe.com, March 4 Borders pbishers. landords band together in bankruptcy, 2011. The Wal Se eet Jama, http://wwww%cem February 25, S. Rosenbaum, 2011, Inside the world af local books-a bright future, Fast Company http //www.fastcompany.com, Februery 21;, Borders bankrupicy What went wrong? 2011, The Wall Street Journal, http//www.waj.com, February 16 M. Frazier, 2011, The three lessons of the Borders banknuptcy Forbes, http://www.forbes com, February 16. M. Spector &A. Trachterbeg 2011. Capter 11 fo Borders, new chapter for books, The Wall Street Journal, htp.//www.wsj.com, February 12Explanation / Answer
1)
The B firm once had upper hand in the books retailing industry by having more than 1,300 stores employing 35,000 plus employees across the globe. But due to few strategic decisions, firm lost its market share to its competitors. The main strategic issues in this case study are as follows:
2)
The rival of the B firm was Barnes and Noble. Due to its poor management and investment decision, the firm had lost its competitiveness with Barnes and Noble. Instead, the leading online retail store A.com has the competitive advantage over Barnes and Noble.
The “A.com” has larger network than the Barnes and Noble and its new product kindle was sold higher than the Barnes and Noble’s nook e-reader. The online sales of Barnes and Noble were dropped down 22% last year. Now, “A.com” has upper hand over its competitors.
3)
The environmental changes that the company should have focused on in the existing hyper-cooperative industry are as follows:
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